| |
| |
|
|
|
|
|
|
Learn How to Lose and Risk Management
One of the leading traders on Chicago Mercantile Exchange, because of a single trade lost everything! For all of his years of experience and money, he had failed to master the most important concept in trading: Risk Management! Each trader seems to have his own unique way of identifying market opportunities. One buys a stock in the hopes of never having to sell it, while another might hold a position in the market for a day or even just a few hours. Yet both individuals might be immensely successful in the markets. How can that be? It's because every trader who has been consistently successful in the markets has mastered the concepts of risk management. Warren Buffet's two rules of investing are: 1. Never lose money and 2. Never forget rule number 1! Paul Tudor Jones says that he is always thinking about losing money as opposed to making money. He does not focus on making money; he is focusing on protecting what he has! Jim Rogers, who for years was a partner with legendary hedge fund investor George Soros, said "My basic advice is don't lose money!" Bernard Baruch, the renowned investor from the first half of the 20th century advised "Learn how to take losses quickly and cleanly." Yet, when most people start trading, the only thing they think about is the profit objective. Countless hours are spent on discovering how to buy and sell the market with unwavering accuracy. Once they buy a market, the amateur trader only thinks about how high is the market going to go. Little effort is put into considering how low the market could go, and where they should get out in order to control their losses. These thoughts, which are so distant from the minds of most traders, are what separate the winners from the losers. Risk management is the practice of determining what percentage of your account to risk for each and every trade in order to maximize the expected profit potential of your trading strategy. Once this amount is determined, this percentage must be translated into an absolute value and stop loss orders must be placed once a trade is entered in order to control potential losses at this value. There is no guarantee that such efforts will control your losses, since the market can gap in price beyond your stop loss order, resulting in losses greater than planned. Ioannis - Evangelos C. Haramis was born in Greece in 1951 and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the editor of http://www.greekshares.com/ To learn how to profit with your investments read: http://www.greekshares.com/orderbook.asp Copyright © 2005 I.E.C. Haramis
MORE RESOURCES:
Investing - Google News |
|
|
|
RELATED ARTICLES
Help with My Annuity The cries are heard from the distance, "I need help with my annuities." Nothing has changed. Super Rules, OK? Do you rule your superannuation or does it rule you?It's easy to fall for some myths about your super unless you do some clear thinking about who is in charge. Virtually all Australian employees now have a superannuation account, many have several, even more than they know about. Success Trading for New Traders: What Does Bid and Ask Mean? Do you ever wonder exactly what's going on in the trading pits after you've sent an order to purchase stock? You've no doubt seen market quotes either online or even in the newspaper. Have you noticed that there are always two sets of prices given? What exactly do those mean and where will my order get filled? Let's discuss the basics of the two prices you see. Emotions: A Traders Worst Enemy; Get Rid of Fear and Greed - Youll be Glad You Did You hear it over and over and over in books, forums, and chatrooms. Fear and greed, fear and greed, fear and greed. Creating Momentum with Options - Pro and Cons of At-the-money, In-the-money, and Out-of-the-money To create momentum in your options trading you need to understand the advantages and disadvantages of at-the-money options, in-the-money options and out-of-the-money options.An at-the-money option has both advantages and disadvantages over stock and in-the-money options. Bad News - Why The Financial News Media Can Cost You Money! The communication innovations we have around us today like the internet, financial newspapers, and special interest television channels focused on investing like CNBC are a high speed pipeline of nonsensical chatter. All these sources of information mean that there is no shortage of media people trying to answer our questions about the stock market and specific stocks. Angels, Are They Real? They're real, but few survive. High risk investing is dangerous to your bank balance. Coca-Cola - A Value Stock? There has been much talk lately about Coca-Cola and its potential as a value stock - as it now spots a dividend yield of 2.6% (which is the highest dividend yield since the late 1980s) and a P/E or less than 21 - right at the bottom of its five-year low. Investing & Online Stock & Share Trading: Money & Risk Management - Atkinson Portfolio Planner (1) This article was originally featured in Daryl Guppy's 'Tutorials in Applied Technical Analysis', voted no 1 trading newsletter in Australia by Shares magazine & no 4 in the world by US Stocks & Commodities magazine and is reprinted here with Daryl's permission.In addition to developing sound technical analysis skills, strong trading psychology coupled with well thought-out money and risk management are also vital key secrets for success when trading or investing in the market. Everybody Wants to Know How to Invest Those unfamiliar with the process of making and managing investments often have more than a few trepidations about investing in general. They figure that, since they do not know how to invest, they will never learn. Before You Invest You Must Read This It is important to answer the following questions before you begin to invest any of your money. The answers to these questions will help to guide you to when, what, where, and how much to invest. Why Should I Use Penny Shares to Build Wealth? A strategic question. Why indeed?1. The American Age of Inflation is Over "The American Age of Inflation is finished." So says economist Robert Samuelson in his December 2nd Washington Post column. Gold; What Type of Gold to Buy JewelryThe advantages are:? Gold Jewelry is the easiest of the gold to buy and has the enjoyment of being able to be worn.The disadvantages are:? Retail Jewelry is often marked up by 300% or more in the shops. Just Say NO to Your Stock Broker We have all heard that slogan that started back when Nancy Reagan was in Washington. It was all about drugs. Real Estate Clubs Hot Among Investors Six or seven years ago, the stock market was booming, Internet companies that no one had ever heard of were valued at billions of dollars, and anyone and everyone was investing their money in tech stocks. Then, in 2000, the stock market crashed, the Internet companies closed their doors, investors lost trillions of dollars, and life went back to normal, more or less. It's Not the Size of Your Bank Account You might think that if you win the lottery or get a huge raise, all your problems will be solved. Sounds logical, right? Well, it might sound logical, but it isn't. Penny Stock Investing The Nature of Penny StocksFor anyone new to investing in penny stocks, you should first be made aware of the differences between these micro-cap stocks and the more conventional blue-chip and mid-cap investments. Unlike buying shares in a large, stable company like Ford or IBM, you are dealing with speculative investments. Finding a Broker "Hey Joe! I need help finding a broker. I notice that discount commission rates are pretty much the same. New U.S. Mint Coins a Golden Opportunity In April, the U.S.
|
| home | site map |
| © BullMarketData.com 2008 |
